The text was prepared by the journalist Tanya Petrova for newspaper “SEGA” within the framework of the project “Digital Democracies vs. Digital Dictatorships” (ACF/970) of the Bulgarian Center for Non-Profit Law, financed by the Fund “Active Citizens Bulgaria” under the Financial Mechanism of the European Economic Area 2014-2021.
The “Wonderful Garden” (“Chudnata Gradina”) in Dobrich is one of the most successful social enterprises in Bulgaria. In the garden, young people with intellectual disabilities produce flower seedlings.
A handful of entrepreneurs have registered under the Social Enterprises Act
Four years after its adoption, the Bulgarian Social Enterprises Act, which should have supported the most vulnerable enterprises – those working with social purpose, turns out to be futile. Social entrepreneurs who employ people from vulnerable groups or work for the public benefit in general see no point in registering under the Act. The registration procedure is considered very bulky, and the guaranteed support against it is symbolic.
This shows the first ex-post Assessment of the impact of the Law on Social and Solidarity Economy Enterprises, commissioned by the Bulgarian Center for Non-Profit Law. The assessment is done after the expiration of the recommended 3-year-long period for analyzing the applicability of the law, and aims to provoke a debate and support the Ministry of Social Affairs in preparing an official report.
Only 35 enterprises have registered under the Act in 4 years and officially have the status of such, according to the Assessment. On this background, the potential interested parties of such registration are thousands – the law accepts as subjects of the Social Economy organizations of different forms, such as cooperatives and non-profit legal entities in public benefit. Without registration, however, the Ministry of Social Affairs does not treat these subjects as social enterprises and does not focus its policy on them. Therefore, they cannot receive EU-funded support for their projects.
There are two main reasons for the lack of interest in registration – the complicated procedure and the malfunctioning and nonobligatory support measures. Over 50% of enterprises surveyed for the evaluation stated that registration was difficult, and some had to even seek additional legal assistance. The registration conditions themselves are considered to be excessive – the law requires 30% of the employees to be from vulnerable groups, and the list of people who are considered eligible is, in turn, limited. It does not include young people under 29 years old, who are coming from residential care or are deprived of parental care, single mothers with small children, and many more. Social entrepreneurs also consider excessive the requirements for a minimum profit (7,500 BGN), which has to be reinvested. Very often, in their first years, which are also the hardest, social enterprises are satisfied if they break even (they are social enterprises, and precisely because of this social purpose, it is difficult for them to quickly expand the business and accumulate profits). The representatives of the social sector point out in a statement that this limits the application of the Act to those who have actually succeeded and do not need so much support.
Not only is the registration for support measures tough and clumsy, the measures themselves are very few and most of them are nonobligatory. A large part of these support procedures refers enterprises to the local authorities, but the mayors are not obligated to implement them – for example, support for workshops or adopting programs for the development of the social economy. In theory, municipal councils can issue building rights for the largest social enterprises for a fee, with the advantage that no auction will take place. One of the few mandatory measures is the construction of a platform by the Ministry of Social Affairs, where enterprises can present their activities. Such a project is planned to be executed under the National Recovery and Resilience Plan. There is also an obligation to finance the training of people from vulnerable groups, but only in the largest enterprises, class A+, with greater profit (over 75,000 BGN).
The Assessment by BCNL points out that the Social Enterprises Act in its current form does not create a good enough framework, and both legislative changes and more context of already existing measures are needed for a proper functionality.
THIS IS NOT JUST A BUSINESS
For another consecutive year, the Bulgarian Center for Non-Profit Law gave 16 organizations the opportunity to develop their ideas for a new social enterprise. The participants of the Project “Let’s Go 2023” went through a training program and mentoring meetings with business representatives in order to further expand their ideas. Three organizations won a total sum of 30,000 BGN for the implementation of their projects. The Association “Medical Space”, with the help of Bulgarian university students, will be developing an accessible online platform for courses, helping prospective medical students in chemistry and biology. The Foundation “Atelier for Ideas DEKOR” will be working on a project related to the employment of disabled people from Troyan. The Foundation “SEED” will be developing a new social space in Samokov, which will provide team building services and serve as a place for career guidance and youth mentoring.
The project is implemented with the financial support of the Fund “Active Citizens Bulgaria” under the Financial Mechanism of the European Economic Area. All responsibility for the content of the document is borne by the Bulgarian Center for Non-Profit Law and the Association of European Journalists – Bulgaria and under no circumstances can it be assumed that this document reflects the official opinion of the Financial Mechanism of the European Economic Area and the Operator of the Fund “Active Citizens Bulgaria”.